Underused graduates add to challenges for UK recovery

Two graduates arrive for a graduation ceremony in London December 9, 2013. REUTERS/Toby Melville

LONDON (Reuters) - Kath Caldwell worries she may have been wrong to encourage her children to go to university.

“I know they gained useful experience,” said Caldwell, a social worker from Warrington in northwest England.

“But they have massive debts and are in jobs they could have got without studying beyond school.”

Of Caldwell’s four children, three are graduates working in jobs that do not require a degree.

They are part of a growing trend in Britain, where rising numbers of underused young workers are a reminder of the challenges of getting the country’s economy onto a sounder footing and rebalancing it more towards manufacturing.

Employers’ groups say vacancies for skilled workers are growing as the recovery picks up speed but that too few graduates are qualified to fill them.

Of the roughly 525,000 undergraduates who completed courses at British universities last year, just 11 percent received degrees in physics, maths, engineering and technology - subjects seen as instrumental in spurring the economy.

Manufacturers, who account for about 10 percent of Britain’s 1.5 trillion pound ($2.5 trillion) economy and about half of its exports, say many more young people must study sciences to lay a foundation for enduring economic growth.

Caldwell’s son, Joe, 22, graduated last year with an upper second-class degree in TV and film production from York St. John University and now works in a bar.

“I’d put three years into my course only to find out it’s a completely undervalued commodity,” he said.

Forty-seven percent of those who left higher education in the past five years were in jobs that did not use their qualifications in 2013, a big jump from 39 percent in 2008, according to official statistics.

Although enrolments on courses in engineering, physics and maths are edging up, experts say the British education system is still churning out graduates with the wrong skills.

John Philpott, director of the Jobs Economist, a think tank, said there was a “fundamental mismatch” between college and university courses and employers’ needs.

WRONG SKILLS

Over the past two decades, the number of graduates in Britain has risen steeply as successive governments have tried to broaden access to higher education. Late last year, finance minister George Osborne announced he would remove a cap on the number of places available at British universities.

Thirty-eight percent of working age adults over 21 now have a higher education qualification, as opposed to 17 percent in 1992, according to the Office for National Statistics.

On the face of it, rising graduate numbers should be a boon to employers. But manufacturers complain their recruitment needs are still not met.

“We will be at a competitive disadvantage if this problem isn’t solved,” said Verity O‘Keefe, an employment and skills adviser at EEF, a manufacturing association.

She said firms in the energy and aerospace sectors were forced to hire skilled workers from overseas to fill vacancies.

Companies would be reluctant to ramp up investment if they couldn’t hire the right kind of staff, O‘Keefe said. That could frustrate Prime Minister David Cameron’s coalition government, which is aiming to focus the economy more on exports.

Promoting apprenticeships and part-time education is crucial to boost the level of skills among British workers, said Neil Carberry, director for employment and skills at the Confederation of British Industry.

“But to get the best out of them, access must be expanded and business has to be in the driving seat,” he said.

In Germany, one of the leaders in vocational education, around 1.5 million people were enrolled on apprenticeship schemes covering more than 340 professions from plumbing to marine engineering at the latest count. A further 2.6 million were registered at vocational colleges.

By contrast, even though the British government says it is providing record funding for similar programs, the number of British apprentices stands at less than 900,000.

The difference helps explains why youth unemployment is running at around 8 percent in Germany and 21 percent in Britain, according to a recent McKinsey & Company study.

SECOND THOUGHTS

The government will make available an additional 185 million pounds over the next four years to support teaching of the sciences and engineering, a spokeswoman for Britain’s Department for Business, Innovation and Skills said.

And young people may be tentatively moving in that direction. In 2012/13, a year which coincided with a steep hike in university tuition fees, enrolments on courses in engineering, maths and physics edged up by about 1 percent, whereas they fell by about 4 percent for humanities subjects such as history and modern languages.

Now faced with a typical debt of almost 40,000 pounds on graduation, according to government estimates, the figures suggest new students are having second thoughts about courses with questionable added value.

In fact, some experts say rising university costs and the problem of underemployed graduates is likely to make apprenticeships more attractive.

Mark Beatson, chief economist at the Chartered Institute for Personnel and Development, said: “For some of the young people who end up in lower-status work, they might wish they’d done an apprenticeship.”